The Nigerian Economic Summit Group (NESG), in collaboration with Zedcrest group, on Tuesday, 25th of April, 2022, held an event with the theme “Securing and enriching Nigerians at scale: Prosperity inclusion through financial sector innovation.”
In his opening remarks, the Group Managing Director of Zedcrest, Mr Adedayo Saheed Hamzat said that prosperity inclusion through financial sector innovation is a follow up to discussions at the 27th Nigerian Economic Summit (NES#27) and focuses on finding ways to enhance Nigeria’s financial environment. He noted the need to address existing gaps by focusing on three thematic points including regulation, bringing more foreign direct investments into the country and evolving the consumer window industry that will transform Nigeria into a credit driven economy.
In his keynote address, NESG Board member and the Chief Executive Officer, Stanbic IBTC Holdings Plc, Dr Demola Sogunle, said that the financial sector is essential to drive financial inclusion and economic growth. He stated that it is crucial for the financial sector, through commercial banks, capital markets, and the insurance sector, to play a vital role in funding capital investments and not just providing industry loans concentrated in the oil and gas sector. Furthermore, Dr Sogunle noted that Nigeria ranks low regarding financial penetration, with 40 percent living below the poverty line, with only 4 percent of the 40 million MSMEs having access to credit.
“The factors affecting the financial sector include lack of credit history, inability to keep proper financial records, non-realization of collateral, lack of management strategies, stiff competition from larger corporates and limited business presence of micro-SMEs. In addition, there is a need to adopt partnerships that will drive mobile adoption and inclusive development. Development of credit infrastructure, creation of financial literacy programs, facilitate open banking initiatives for information sharing and collaboration to develop innovative financial products amongst stakeholders,” Dr Sogunle stated. He noted that homegrown solutions to some of these problems include online payment provisions, payment data to determine lending risks which can be obtained from smartphones, SME hubs to generate records on transactional activities and improved credit scoring in the rural areas, mainly where banking activities are limited, reiterating that businesses must strengthen their capital base to survive as an SME.
During the first panel session, Mr Ayo-Bankole Akintujoye, the Lagos SME Boot camp convener, said that SMEs respond to shocks quickly, and it is nearly impossible to intervene at individual levels. He reiterated the need to leverage, register, and provide credit and exposure to some clusters. “Technology alone will not solve financial inclusion problems. We need to study the characteristics critically; leverage the clusters they respect and mobilize resources using the clusters as gatemen to reach the people at the end of the funnel,” he stated.
Mr Dayo Obisan, Executive commissioner (operations), Securities and Exchange Commission (SEC), said that proper financial education is essential, as, for every 100 businesses funded, only five are expected to be profitable. He said there is a need to raise capital for structured firms with proper financial record keeping.
During the second panel session with the theme “Attracting Foreign Capital to Nigeria, Post-Pandemic”, Mr Sam Ocheho, Head of Global Markets, Stanbic IBTC, said that necessary infrastructure must be in place for Nigeria to export and earn revenue from non-oil products, noting that fines deter foreign investors and that Nigeria ranks low on the World Bank ease of doing business index ranking. In her remarks, Mrs Yinka Adelekan, MD Agusto & Co, said Structural reforms had brought foreign investments into several countries. Nigeria needs to learn and adopt the positives from other countries for her growth and development. She reiterated the need for the laws governing fintech to continue stimulating innovation that will improve foreign direct investment and encourage companies to thrive.
During the third panel session, with the theme “Striking a balance between Innovation, Regulation and Consumer Protection in the Financial Sector”, Professor Olayinka David West, Associate Dean and Professor of Information System, Lagos Business School, said that technology is a great tool but not a magical solution to every problem. She noted that financial service providers should not wait for economic times to change before providing financial services to people of all strata of life.
Furthermore, Dr Tunde Popoola, CEO of CRC Credit Bureau Limited, revealed that credit penetration in 2009 was 4 percent, and it has grown to about 14 percent now. He stated that fintech and financial innovation should help stimulate faster growth in all of these, noting the need for a robust digital identity that will encourage specific and targeted services that will enhance access to credit.